Calls by the Trump administration for Germany and other Nato partners to increase spending on defence have been rejected by Germany.
Foreign Minister Sigmar Gabriel said it was "quite unrealistic" to believe Germany would spend 2% of its economic output on the military.
Other spending such as development aid, he said, should be taken into account.
However, Nato chief Jens Stoltenberg echoed US calls for member states to pay an equal proportion.
"Diplomacy, development aid, economic co-operation can be important to help stabilise a region," Mr Stoltenberg told a news conference after Nato talks in Brussels.
"We have international targets, guidelines, for development aid, 0.7% of GDP [gross domestic product], and then we have a Nato agreement on moving towards 2%. But those are two different things... It is not either development or security, it is development and security."
US Secretary of State Rex Tillerson told his counterparts in Brussels that by the next Nato summit - to be held in Brussels in less than eight weeks' time - there should be a commitment to produce clear plans to demonstrate how each country would meet its spending commitments.
"As President [Donald] Trump has made clear, it is no longer sustainable for the US to maintain a disproportionate share of Nato's defence expenditures," he said.
According to Nato's 2016 annual report, only five countries met the 2% target - the US, the UK, Greece, Poland and Estonia. By contrast, Germany spent 1.2% on defence.
However, according to latest OECD available figures based on gross national income, Germany spent more in relative terms on overseas development aid in 2015 than the US - 0.52% of GNI compared with 0.17% for America.
The meeting of Nato foreign ministers, originally scheduled for next week, was brought forward to suit Mr Tillerson's schedule.
The US secretary of state told Ukrainian Foreign Minister Pavlo Klimkin, who was also at the meeting, that American and Nato support for Ukraine remained "steadfast" after "Russia's aggression against Ukraine" three years ago, when it annexed Crimea.
"Today, Russia's ongoing hostility and occupation is compromising our shared vision of a Europe that is whole, free and at peace," Mr Tillerson said.
Russia's foreign ministry responded in a statement (in Russian) by accusing Nato of spreading "the myth of a 'Russian threat'" and "the slander of 'Russian aggression'".
"The US and its allies are obsessed with building up their military presence on our borders, justifying it with the need to 'restrain Russia'," the Russian ministry said.
During Mr Tillerson's congressional confirmation hearings this year, opponents of his nomination expressed fears that the former head of Exxon Mobil would be too close to Russia, having had good relations with President Vladimir Putin.